Oracle Text

At the beginning of your upkeep, you lose 1 life and create a 1/1 black Faerie Rogue creature token with flying.

Card Rulings

4/1/2008 The effect is mandatory. You’ll lose 1 life even if you have only 1 life left.
4/1/2008 The life loss isn’t a payment. You’ll get a token even if you had 0 life (and another effect is stopping you from losing the game).